Published on January 2nd, 2013 | by Gizmodo0
The Future of TV May Not Be Worth It
The platonic ideal of television’s future is a la carte consumption: the ability to pay only for the channels you want. It’s a dream that everyone from Apple to Intel has reportedly pursued, and one that every half-sentient cable customer desires
The platonic ideal of television’s future is a la carte consumption: the ability to pay only for the channels you want. It’s a dream that everyone from Apple to Intel has reportedly pursued, and one that every half-sentient cable customer desires. But maybe the question isn’t can—or will—this happen some day. What we should really be asking is: when it does happen, what will it cost us?
It’s tempting to think that we’re inching closer to a TV revolution; if recent reports of Intel’s internet-TV set-top box are any indication, the technology is certainly in place. But, tellingly, the WSJ reports that Intel’s ambitions have been stymied by the same thing that’s kept Apple on the sidelines: the inability to cut a deal with the networks.
This is the part where we grumble and stomp our feet about the incalculable greed of Big Cable. If Apple could cut a deal with record labels, the logic goes, why not TV?. But the truth is, there’s more than just obstinance at work here. The music industry was dying a slow death when Apple offered a life vest; Time Warner’s Networks division alone, meanwhile, posted a $1.2 billion profit just last quarter. Cable companies and content owners aren’t damsels in distress; they’re dragons stockpiling gold.
We can start with how much your cable provider pays for access to certain channels. Those numbers aren’t widely accessible, but we do know that ESPN—the big dog of pay-TV—costs your cable provider at least $4.69 per subscriber per month. How can one station command such a fee? Because cable channel pricing, like everything else, is based on supply and demand, and ESPN’s ratings are nearly twice that of the number two pay cable network.
But how much more? Consider that HBO, in less than a third of the number of households as ESPN, costs cable companies a reported $7 per customer per month (you end up paying more than twice that, on top of your regular cable bill). Consider, too, the marketing costs that cable companies cover, the streaming costs of an internet-based package that would be shouldered by the networks. It’s not unreasonable to think that ESPN alone would cost upwards of $20 per month as a standalone product. And that’s probably a conservative estimate.
As Gabriel Rossman says so eloquently here, the real reason you can’t get HBO Go as a standalone network is that it’s owned by Time Warner Inc., which stands to make far more by bundling its networks then letting them go one by one. Even if it made financial sense for HBO to set itself free, it would be absurd for Time Warner to let that happen. Bundles are more profitable than one-offs.
It’s an unfortunate fact of life that just because a critical mass of people want something doesn’t mean they’ll get it. This is especially true when it comes to cable. While other markets are open to disruption—here’s that thing you like, but cheaper—cable content and access is so tightly integrated, your choices so limited, that there’s next to no chance of an avenging hero rising from the depths.
Still, though, there’s a glimmer of hope. Intel has apparently reached at least one content deal (although who knows at what cost). Apple may have set aside its grand designs in favor of a boring set-top box, but it’s got enough clout to keep banging on that door. And major content companies like Disney (which, incidentally, owns ESPN) might be more open to a la carte deals than your neighborhood ISP.
This Article was originally posted in Gizmodo